e-quiz from libf

[Mickhon2013]

Hi Everyone,

I came across this quiz question on the website of libf (http://cdcs.libf.ac.uk/equiz) The question and answer are stated as follows. However, I have no clue as to why is the answer B. What is it that when the issuing bank is also the nominated bank, deferred payment and negotiation are not possible? but only payment and acceptance are possible?
I hope experts here can explain on this concept a bit. Thanks for your input in advance.

4. Which of the following payment terms are possible under a credit available with, and requiring a draft drawn on, an issuing bank?

1. Payment.
2. Deferred payment.
3. Acceptance.
4. Negotiation.

A. 1 and 2 only.
B. 1 and 3 only.
C. 2 and 3 only.
D. 3 and 4 only.

ANS: B

[picant]

Hi Pal,

B) is because acceptance will replace a deferred payment, draft accepted by the issuing bank is a
deferred payment undertaking.
Other comments appreciated
Ciao

[gondem]

Hi,

B is correct because a draft is required by the L/C.
You cannot use deffered payment when a draft required.
You cannot use negotiation when the draft to be drawn on the issuing bank.
Issuing bank's branch could be the nominated bank but it considers totally seperate bank from the issuing bank.
So, the options are payment and acceptance.

[dinesh2476]

Hi,

LC available with Issuing bank
A draft has drawn at Issuing bank

Payment - Sight - No mandatory requirement for a draft to be presented
Deferred - No draft required
Nego- LC available with issuing, Issuing bank cannot negotiate its owns undertaking.
Acceptance- Draft is mandatory.

Which of the following payment terms are possible under a credit available with, and requiring a draft drawn on, an issuing bank?

1. Payment.
2. Deferred payment.
3. Acceptance.
4. Negotiation.

A. 1 and 2 only.
B. 1 and 3 only.
C. 2 and 3 only.
D. 3 and 4 only.